THE destruction of our forests is often funded by the very banks where we keep our savings and take out loans.
A report released last month titled “Regulating Finance for Forests and Community Rights in Malaysia”, commissioned by SAM on behalf of the Forests and Finance Coalition, has successfully identified that Malaysia’s financial regulations are misaligned with the Global Biodiversity Framework.
However, to truly achieve the goal of protecting forests, the solution needs to go from producing policy papers towards addressing the practical “on-the-ground” realities of the banking sector.
Here are three suggestions for a better, more actionable way forward:
- Bridge the “capacity gap” (don’t just regulate, educate): The report criticises banks for “not taking action”, but most banks simply do not have the environmental personnel to verify compliance. So, instead of just asking Bank Negara to punish banks, advocate for a capacity-building fund. Propose that a small percentage of all green financing or loans to high-risk sectors (like palm oil) be directed into a central fund managed by Bank Nega-ra or the Securities Commission.
This fund could be used to train bank officers or hire a panel of certified freelance environmental consultants that all banks can access.
This ensures expert oversight without each bank having to build a massive in-house team.
- Push for a centralised, public database: One of the biggest hurdles for banks is the lack of reliable data. A bank officer in Kuala Lumpur cannot easily verify if a borrower in Sarawak is clearing protected forest. The better way is to lobby the government to create a public, centralised “Deforestation Risk Register”. This would be a digital platform (perhaps managed by the Natural Resources and Environ-mental Sustainability Ministry) that uses satellite technology to map forest cover and land-use changes. If a company applies for a loan, the bank can simply check this register. If the company’s concession appears red (indicating recent deforestation), the loan is automatically flagged. This removes the guesswork and need for expensive, complex due diligence by unqualified staff.
- Shift from blame to incentives: While regulation is necessary, banks are businesses. They will comply faster if there is a financial benefit. The better way is to work with Bank Negara to create tiered interest rates based on biodiversity performance.
For example, a bank that has a portfolio with a high percentage of “forest-friendly” loans could be allowed to borrow money from Bank Negara at a lower rate. This makes protecting forests a profitable business model and aligns with the “Green Financing” concept.
By helping to build the infrastructure (databases), the human capacity (freelance experts/funds) and the financial incentives (tiered rates), SAM can help turn a critical report into a real-world solution that saves Malaysia’s forests.
On their part, the public could:
1. Ask questions: As customers, you have the right to ask your bank: “Where is my money going? Are you financing companies that are clearing our forests?”
If banks know their customers care about biodiversity, they will be forced to listen.
2. Support ethical banks: If possible, choose to bank with institutions that have clear, public “No Deforestation” policies. Move your savings away from banks that fund destruction.
3. Demand transparency: Support SAM and other NGOs by signing petitions or supporting campaigns that push for Bank Negara to make biodiversity re- porting mandatory, not optional.
PR
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